Democratic Budgets

Posted by jlubans on August 01, 2012

Something akin to what goes on in New England town meetings is brewing in different parts of the country. That something is participatory budgeting. NPR did a story ("Chicago Ward Gives Budgetary Power To The People") in late May 2012. I’ve since discovered there is a national organization
with active projects in Chicago, New York City and here in North Carolina in the city of Greensboro an hour away from where I live.
The National Public Radio story, by John Bliewen, talks about how one politician in Chicago decided to democratize the spending of the annual allocation of 1.3 million dollars for capital improvements in his ward. Instead of following the usual custom of the ward boss’ calling the shots, he called a group together and told them: "I am ceding my power to decide how this money is spent and giving it to you." (No, not the money, the power to decide!) People came up with proposals, lobbied for their ideas, and then the ward’s voters (1400 took part) decided which of the 21 projects would be funded. Sort of like a New England town meeting.
And, this week, the city of Vallejo, CA (pop 120,000) began the process to decide what projects will be funded from a budget of $3.4 million. However, unless I am misreading newspaper reports,
Vallejo is hedging its bets on democratization. The expenditure proposals getting the most popular votes will be submitted to the city council for approval! Unlike the New England town meetings, Vallejo’s citizen vote will not be a binding one. The Council will make the final decision, if any. This condition suggests some of the resistance to participatory budgeting.

Participatory budgeting reminds me of when I decentralized the budget of an organization in which I worked. It was a large non-profit and one of the things we always suffered from was antiquated equipment. We had never established an amortization fund nor for, that matter, did we have an annual separate fund for capital equipment. And, like most not for profits, a new budget was 99% committed on the first day of each fiscal year, leaving all too few discretionary dollars.
While we had some dedicated computer terminals, about 8, their use was rationed among two-dozen or more staff. Another 60 staff had minimal computer access. This was not efficient and we were increasing backlogs instead of eliminating them. We all knew that if we had modern equipment our productivity would go up, our turnaround times would improve and we would be serving our customers immeasurably better. But, unless somebody gave us the money we were out of luck. While the central administration supported us in many ways, it did not have the money needed to get computers for every person.
One of my monthly jobs, as an upper administrator, was to review the budget. One category caught my eye: salary savings. This line represented dollars “saved” whenever a position was left open for a few weeks during recruitment and hiring. In our case we got to keep and re-use these leftover dollars. It crossed my mind that if we kept some positions vacant for a few months, we could accumulate a lot of money, enough to pay for the desperately needed computers. I went, with my boss’ approval, to the department heads in my division and pitched this idea to them: If we hold vacancies open x amount of time – with your approval - the salary savings will be yours to use for equipment and other things essential to your work. They agreed. Each month every department head got the salary savings report and distributed it to the staff. Soon, we all could see the dollars accumulating. In a few months, we began purchasing computers. And, we built up an amortization fund for future use.
As I think about it, we decentralized AND democratized budgeting. Naturally this was looked at askance by some, just like those reluctant in Vallejo to share power. I found that if we gave department heads the freedom to decide how long to keep a position open, to balance the workloads, and to consider the sacrifice involved (vs. potential benefits), they would do so in responsible and careful ways. As the new equipment came on line our productivity soared. Savings continued to accrue as the computers helped us streamline. My boss made it clear to everyone that as we automated processes and freed up staff no one would lose their job. Redundant positions were transferred into vacancies or into new positions in other parts of the organization.
Giving taxpayers decision-making authority in spending tax dollars seems like a fine idea. I hope that the participatory budgeting efforts planned and underway will be a genuine test of the pros and cons.

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Posted by jlubans on August 02, 2012  •  10:39:08

Re profit, in this case there was none. We used existing funds in different ways.
There are some not for profit organizations that are more like for-profits than others. The NCAA is the poster boy for this dubious distinction.

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